In a rare reappearance of windfalls, 15,000 members of MGM Advantage are to
receive payments averaging £592.

More than 15,000 members of MGM Advantage have been offered windfalls averaging £592 if the mutual is sold to private equity firm TDR Capital.

The payouts, which total £9m, are for with-profits policyholders. These policies will no longer be sold once the deal is completed, with the new company focusing on offering annuities, trading still under the MGM Advantage brand.

Sir William Proby, chairman of MGM Advantage, said: "We set out a strategy in 2008 to return the society to growth, reverse the decline in our membership and to manage our risks in uncertain markets.

"Since then our focus has been selling new business in the retirement income market, which has proven highly successful. We have been looking at how to unlock the value created by the new business strategy and have considered a whole range of options. This deal provides the best outcome for members and policyholders."

Tom McPhail, head of pensions research at financial adviser Hargreaves Lansdown, said the deal should "bring a more stable and prosperous future to members, policyholders and employees".

"Annuity business is extremely competitively priced and also requires substantial amounts of capital so it is good news that the MGM board have found a way to maintain their presence in the market place," he said.

"Annuity buyers in the UK can take advantage of this competition by shopping around for the best terms; hopefully through this deal MGM Advantage will continue to play an active role in this competitive market."

Members will be invited to an extraordinary general meeting (EGM) - which is expected to be held by the "middle of the year" - where the proposal will be explained in detail.

Those unable to attend will get a postal ‘proxy vote’.

MGM Advantage, which moved from London to Worthing in 1974, was formed as a mutual - the Marine & General Mutual Life Assurance Society - in 1852. It employs around 250 people.

A brief history of windfalls

Windfalls have become rare after a run of demutualisations, mostly in the late 1990s.

Standard Life's conversion in 2006 was one of the few large ones of the last decade, when it handed windfall shares to 1.7million policyholders.

Many of Britain's building societies shed their mutual status in the 1990s so they could list on the stock market.

Alliance & Leicester, now part of Santander, and the now-infamous Northern Rock, floated in 1997.

Halifax was the largest demutualisation at the time, handing average £2,500 windfalls to 7.8 million members.

But there are still rare surprises. Members of Barnsley Building Society were told in December that they would receive up to £5,000 after the mutual recovered money tied up in failed Icelandic banks.

Barnsley was forced to merge with Yorkshire Building Society after £10m it had deposited with two Icelandic banks, Kaupthing Singer & Friedlander and Heritable Bank, was feared lost.

But at the time of the merger it promised that any money it recovered from the banks' administrators would be returned to its savers and borrowers. It has said before Christmas that £8.8m had been recovered after a four-year process.